Premiums for employer-sponsored health insurance rose an average of 6.1 percent in 2007, less than the 7.7 percent increase reported last year but still higher than the increase in workers’ wages (3.7 percent) or the overall inflation rate (2.6 percent), according to the 2007 Employers Health Benefits Survey released yesterday by the Kaiser Family Foundation and the Health Research and Educational Trust.

The annual survey provides a detailed picture of how employer coverage is changing over time in terms of availability, costs and coverage for the 158 million people nationally who rely on employer-sponsored health insurance.

The average premium for family coverage in 2007 is $12,106, the survey reports, and workers on average pay $3,281 out of their paychecks to cover their share of the cost of a family policy.

“Every year, health insurance becomes less affordable for families and businesses,” said Drew E. Altman, Ph.D., president and CEO of Kaiser. “Over the past six years, the amount families pay out of pocket for their share of premiums has increased by about $1,500.”

The 60 percent of firms offering health benefits to at least some of their workers is relatively unchanged from last year (61 percent), the survey noted. The offer rate remains lower than it was in 2000, when 69 percent of firms offered health insurance. Nearly all (99 percent) of large businesses with at least 200 workers offer health benefits to their workers this year, but fewer than half (45 percent) of the smallest firms with three to nine workers do so.

HSA And HRA Plans

An estimated 3.8 million workers are enrolled in “consumer-driven” plans (about 5 percent of all workers), equally divided between high-deductible plans that qualify for a Health Saving Account (HSA) and plans with a Health Reimbursement Arrangement (HRA). These plans offer a high-deductible plan and a tax-preferred savings option, from which employees can pay for their out-of-pocket medical expenses.

Only 10 percent of firms responding offered such types of plans to their workers, compared to 7 percent in 2006. About 3 percent of firms say they may add an HRA plan in 2008, while 2 percent may add an HSA-qualified plan.

Premiums for these plans are generally lower than for other types of plans, but employers may also contribute money to the savings accounts. The survey found that firms on average pay a total of $7,815 toward the cost of family coverage for an HSA-qualified plan (including $714 for the account) and $10,179 toward the cost of the same coverage for a high-deductible plan with an HRA (including $1,800 for the account).

This is compared to the $8,879 average firm contributions for other types of plans.

Worker Contributions

Covered workers on average pay 16 percent of the overall premiums for single coverage and 28 percent for family coverage, the survey reported - this has remained relatively stable over the past years.

However, workers in small firms (three to 199 workers) pay significantly more on average toward the cost of family coverage - $4,236 annually, compared to the $2,831 paid by those who work in larger firms.

For single coverage, the opposite is true. Workers at small firms contribute $561 annually, while those at larger firms pay $759.

Other findings include:

  • Cost-sharing. In 2007, for firms with deductibles, the average general annual deductible for single coverage is $461 for PPOs (preferred provider organizations), $401 for HMOs (health maintenance organizations), $621 for POS (point-of-service) plans and $1,729 for consumer-driven plans.

    For plans with three- or four-tiered drug cost-sharing, the average co-payments were $11 for generic drugs, $25 for preferred drugs and $43 for nonpreferred drugs. Co-payments for fourth-tier drugs averaged $71.

  • Domestic partner benefits. Nearly half (47 percent) of survey respondents that offer health benefits make them available to unmarried opposite-sex domestic partners, and nearly 37 percent offer such benefits to same-sex partners. Large firms (at least 200 employees) were less likely to offer domestic partner benefits to unmarried opposite-sex partners.

  • Market share of health plans. The survey found that PPOs continue to dominate the employer market, enrolling 57 percent of covered workers. HMOs cover another 21 percent of workers, and POS plans cover 13 percent.

    Consumer-driven plans account for 5 percent, and conventional indemnity plans are 3 percent.

  • Other pre-tax benefits. Overall, 61 percent of responding firms offering health benefits allow workers to use pre-tax dollars to pay for their share of their health premium costs. Almost a quarter (22 percent) offer a Flexible Spending Account, in which workers can set aside pre-tax money to cover out-of-pocket healthcare spending.

    In both cases, large firms are more likely to offer these benefits than large firms.

  • Future outlook. Many employers indicate in the survey that they expect to make significant changes to health plans and benefits next year - 21 percent of firms say they are “very likely” to raise workers’ premium contributions, 13 percent are likely to increase office visit co-pays, 12 percent to increase deductibles, and 11 percent are likely to increase prescription drug co-pays.

    The survey was conducted between January and May of this year and included 3,078 randomly selected, nonfederal public and private firms with three or more employees. For a copy of the full survey, visit the Kaiser Family Foundation’s Web site at www.kff.org.